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Unisys 2Q disappoints
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July 18, 2000: 11:55 a.m. ET
Unisys 2Q falls short of lowered estimates, also warns about 3Q
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NEW YORK (CNNfn) - Unisys Corp. can't seem to get anything right lately -- after issuing two earnings warnings earlier this year, the computer services provider posted Tuesday second-quarter earnings that fell short of analysts' already lowered estimates, and issued yet another earnings warning.
For the three months ended June 30, the Blue Bell, Pa.-based company's earnings - which exclude a one-time charge for debt repayment -- was $56.3 million, or 18 cents a diluted share, compared with year-ago earnings of $118 million, or 37 cents per share.
Analysts polled by earnings tracker First Call had expected the company to earn 19 cents a share. Before Unisys issued an earnings warning on June 29, analysts had expected the company to earn 37 cents per share.
In response to the earnings news, which came out before the market opened Tuesday, the company's stock lost 2-11/16 to 11-7/16, a 19 percent plunge. The stock drop brings Unisys to a new 52-week low that is 77 percent below its 52-week high. The company's price-earnings multiple is a mere 8.5 and its market cap is down to $3.6 billion, all signs that investors and analysts are losing patience with Unisys.
 Including the one-time charge in the second quarter of $19.8 million, or 6 cents a share, the company reported diluted net income of $36.5 million, or 12 cents a share.
Revenue also fell to $1.6 billion from $1.9 billion in the year-ago quarter; a 16 percent drop. On June 29, Unisys said that its sales would be $1.62 billion to $1.65 billion, off about 14 percent from strong levels a year earlier.
Also on Tuesday, Unisys (UIS: Research, Estimates) warned that its third-quarter results may fall short of forecasts.
"We expect our third-quarter revenue to be down from a year ago and our earnings per share to be below the second quarter 2000 level," Unisys Chairman and Chief Executive Lawrence Weinbach said. "We look for a pickup in revenue in the fourth quarter, particularly in our technology business, with earnings per share relatively flat from year-ago levels."
According to First Call, Unisys was expected to earn 36 cents a share in the third quarter.
In late June, Unisys attributed its poor financial results to delays in several large contracts and continued weakness in its federal government and financial services businesses. The company expects its revenue and earnings per share to decline about 5 percent for all of 2000, excluding a one-time charge in the second quarter.
In a conference call last month, Unisys' management discussed several steps it will take to shape up its services division, including a hiring freeze, training of all sales personnel in e-business, and "a complete review of the services strategy."
Other large computer services firms have experienced problems similar to those at Unisys. On June 9, the stock of Electronic Data Systems Corp (EDS: Research, Estimates), one of Unisys' main competitors, plunged after it forecast disappointing second-quarter revenue. EDS said then that it expects to report "soft" second-quarter revenue, news that hurled its stock down nearly 24 percent. In addition, some analysts are concerned about IBM's computer services business. 
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